Padoan says economic crisis less severe, Italy still weak

Economy minister says recovery is coming gradually

(ANSA) - Rome, March 12 - The economic crisis in Italy is
less severe but the recovery remains weak, Economy Minister Pier
Carlo Padoan said Wednesday as his government unveiled a major
program of tax cuts and social investments.

"We are in a phase of macroeconomics in which we are
recovering, but we are still weak," he said.

"The crisis is a bit less severe than in the past but it is
not over yet," added Padoan, who was until recently chief
economist of the Organisation for Economic Co-operation and
Development (OECD).

He spoke after Premier Matteo Renzi announced plans to cut
income taxes by 10 billion euros, invest 1.74 billion euros in
social housing programs, spend 3.5 billion euros on schools,
repay 68 billion euros in outstanding bills for government
services by July, and various labour market reforms.

The expensive program appeared aimed at giving the
struggling economy a domestic lift by putting more money into
consumers' pockets to spend.

Renzi said he was confident the European Union would
appreciate his efforts to boost growth, and both he and Padoan
maintained the plan will not threaten the EU's budget deficit
limits.

Italy has said it will remain below the 3% maximum
deficit-to-GDP limit mandated by the EU, but faces challenges in
maintaining that as weak economic growth appears likely to stay
in the months ahead.

On Tuesday, the OECD warned that although economic growth
in the first quarter will be relatively positive at 0.7%, the
second quarter of 2014 still looks weak, likely showing just
0.1% expansion between April and June.

Mixed results are nothing new in the lackluster Italian
economy which has struggled to recover from its worst recession
since the Second World War.

Still, it received a bit of good news Tuesday as official
data from the national statistical agency Istat confirmed that
Italy's economy grew slightly - about 0.1% - in the final
quarter of last year compared with the previous quarter, proving
the harsh two-year recession is over.

Istat also revised upwards its official estimate for GDP
for 2013, reporting that it fell by 1.8% rather than the 1.9% it
had previously estimated.

Both figures suggest that the country is on a painfully
slow path to recovery.